Contemporary Accounting Issues: Adherence of Flight Centre Travel Company with AASB Conceptual Framework

This report analyzes the adherence of Flight Centre Travel company in alignment with the conceptual framework of AASB. The organization confirms with the regulations of financial reporting conceptual framework of IFRS. The balance sheet statement is developed in a way which supports investors to attain important information related with its economic resources aligned with AASB regulations.

Running head: CONTEMPORARY ACCOUNTING ISSUES
Contemporary Accounting Issues
Name of the University:
Name of the Student:
Authors Note:

1CONTEMPORARY ACCOUNTING ISSUES
Table of Contents
Introduction..........................................................................................................................2
Attaining conceptual framework objectives........................................................................2
Attaining conceptual framework-based recognition criteria...............................................5
Equity...............................................................................................................................6
Assets...............................................................................................................................6
Liabilities.........................................................................................................................7
Expense............................................................................................................................8
Revenue...........................................................................................................................9
Addressing qualitative aspects of conceptual framework...................................................9
Faithful Representation....................................................................................................9
Relevance.......................................................................................................................10
Verifiability....................................................................................................................10
Comparability................................................................................................................10
Understandability...........................................................................................................11
Timeliness......................................................................................................................11
Conclusion.........................................................................................................................11
References..........................................................................................................................13

2CONTEMPORARY ACCOUNTING ISSUES
Introduction
For developing the financial statements, the conceptual framework associated with the
financial reporting is vital for the companies in the recent years. This is due to the fact that it
offers significant course of action as well as the principles along with techniques required to
prepare all the financial reports (Biondi and Lapsley 2014). In addition to the fact that, the
conceptual framework might facilitate in dealing with several concerns of the corporate firms. In
order to improve the quality of the report Flight center travel company is chosen that is listed in
ASX top 100 companies. The objective of the report is to analyze the adherence of this company
in alignment with the conceptual framework.
Attaining conceptual framework objectives
The conceptual framework has an important function to play in dealing with the financial
factors of the companies. For addressing the needs of the financial reporting, such framework
was developed from the behalf of the “International Accounting Standards Board (IASB)” in the
year 1989 (Brown, Preiato and Tarca 2014). For this reason, the conceptual framework can
support in dealing with an organization’s financial aspects. Based on the company’s recent
annual report of 2017, the principles are presented within “Corporation Act 2001” and AASB are
ensured for general purpose financial reporting. Along with the same, the consolidated financial
statements are prepared relied on standards and principles of “International Financial Reporting
Standards (IFRS)” as well as “International Accounting Standards Board (IASB)”. For this
reason, the organization totally confirms with the regulations of financial reporting conceptual
framework of IFRS (Christensen, Lee Walker and Zeng 2015). For aligning with such
framework, it is also vital for the companies to address three specific objectives. These

3CONTEMPORARY ACCOUNTING ISSUES
objectives along with the degree to which the organization aligns with such objectives are
examined below:
 Reliable financial information- The annual report of the company indicates that it offers
timely information regarding financial statements to its investors to make effective
investment decisions (Crawford et al. 2014).
 Analysis of amount, timing and uncertainties- It is important to offer important
information to its investors in evaluating amount, uncertainties and timing that is aligned
with Flight center travel company’s cash flow.

4CONTEMPORARY ACCOUNTING ISSUES
 Information concerning company resources- In case of Flight center travel company, the
balance sheet statement is developed in a way which supports investors to attain
important information related with its economic resources aligned with AASB
regulations (De Villiers, Rinaldi and Unerman 2014).

5CONTEMPORARY ACCOUNTING ISSUES
Attaining conceptual framework-based recognition criteria
With alignment with the AASB financial accounting conceptual framework, to is vital for
the companies to report its financial information in adherence to the recognition criteria
associated with the asset, revenues, expenses, equity along with the liabilities (Fctgl.com. 2018).
From another perspective, it is vital for them in addressing three basic criteria. The second

6CONTEMPORARY ACCOUNTING ISSUES
criteria are to offer a viewpoint on the financial aspects that have important information in a
faithful manner. The final criteria are to enhance the usefulness of such aspects for the investors.
Such criteria are analyzed with respect to Flight center travel company in order to determine its
adherence with AASB conceptual framework that is explained below:
Equity
Considering the case of Flight center travel company, the major equity items encompass
the reserves, issued capital along with the retained earnings (Firth and Gounopoulos 2017). The
incremental amount is substracted from the overall equity of the organization.
Assets
It is observed from the case of Flight center travel company that it is likely to include
certain asset classes. One among such assets in the case of this company is plant, property and
equipment that is mentioned within the company’s financial statements after depreciation is
decreased from the asset cost. The asset expense is just recognized in a situation the company
expects future advantages from it (Lovell 2014).

7CONTEMPORARY ACCOUNTING ISSUES
Liabilities
Flight center travel company has two distinct capability types that is evident from its
annual report. It identifies the deferred tax liabilities relied on the variations in the tax rate.
Through observing the contingent liabilities, the major items are taken into account in case the
company includes guarantees, capital expenses, joint expenses as well as legal along with
regulatory surroundings (Mayne 2017). As per the views of Flight center travel company’s
management the company do not need any provision for such obligations because of the

8CONTEMPORARY ACCOUNTING ISSUES
decreased chance that economic advantages can get decreased in future or unreliable amount
measurement might take place.
Expense
In consideration to the expenses related to Flight center travel company, they are
recognized through taking into consideration these aspects (Palea 2014). Certain significant cost
associated with the company includes direct raw materials, consumables, depreciation,
amortization, impairment, labor and tax. Certain other expenses are recognized and revealed at
the time thy take place. For this reason, the analysis of all the recognition aspects are represented
within the financial reporting conceptual framework. This signifies that Flight center travel
company has aligned its financial statements with all the important guidelines that offers vital
and advantageous information to its investors (Soh and Martinov-Bennie 2015).

9CONTEMPORARY ACCOUNTING ISSUES
Revenue
Flight center travel company’s management considers to conduct revenue recognition at
the selling point after reducing the tax expenses. In addition, recognition of the sales provision is
recognized through focusing on the overall analysis. For this reason, the selling value encompass
the revenue gathered by means of the product sale (Vafaei, Ahmed and Mather 2015).
Addressing qualitative aspects of conceptual framework
Conceptual framework of financial reporting as per AASB includes some qualitative
characteristics that is helpful in attaining the quality of financial reporting of a corporate firm.
Flight Centre Travel company requires to maintain such characteristics and considering the same
critical analysis is carried out. This is in order to recognize the extent of adherence with the
qualitative characteristics explained within AASB framework (Vafaei, Ahmed and Mather
2015).
Faithful Representation
All the Australian companies are obliged for making transparent and fair financial
statements representation of the financial information. In order to make sure the same, the
shareholders confidence has a considerable role from the perception of the company. Audit
report developed by KMPG for Flight Centre Travel company also takes into consideration that

10CONTEMPORARY ACCOUNTING ISSUES
faithful representation of the financial report is maintained for the reason that it has dealt with
vital accounting standards considerably and faithfully.
Relevance
As per this factor, relevancy is deemed to be important for information offered for
enhancing the decision-making process of the company. Considering the case of Flight Centre
Travel company, alignment was observed in consideration to AASB, IFRS and Corporations Act
2001 (Brown, Preiato and Tarca 2014). Additionally, it also takes into account the recent rates of
depreciation, tax and few more. For this reason, efficient financial decisions might be considered
as Flight Centre Travel company offers valuable information within the company’s financial
statements.
Verifiability
It is needed or all the corporate firms to reveal their financial data in a way that its
investors are capable to verify them in a better manner. For making sure of this particular
characteristic, Flight Centre Travel company segments all its business conducts through offering
notes within the annual report of a company and its financial statements (Soh and Martina-
Bennie 2015).
Comparability
This factor offers increased opportunities to its stakeholders that can facilitate in realizing
the similarities along with deviations within the financial information among several financial
reports. The important information is offered to the users by representing by means of charts and
tables for better understanding (Soh and Martinov-Bennie 2015). For this reason, the financial

11CONTEMPORARY ACCOUNTING ISSUES
report of Flight Centre Travel company can be compared with all its market rivals for attaining a
viewpoint regarding real financial position of the company.
Understandability
Through attaining the aspects of this factor, the financial information requires being
reported in a manner that it turns out to be simple for the investors to understand the same in a
better manner (Brown, Preiato and Tarca 2014). Flight Centre Travel company reports its
financial information in aa format that is aligned with the financial reporting conceptual
framework that facilitates all its investors to understand them in a better manner.
Timeliness
All the companies require to maintain a fixed timeframe for indicating its financial
information to all its investors. Annual and quarterly financial reports are observed to be offers to
be investors in the situation of Flight Centre Travel company. For this reason, timely information
disclosure might facilitate in attaining the users trust as this might facilitate in attaining a fair
perception regarding the position and performance of the company within the market (Vafaei,
Ahmed and Mather 2015).
Conclusion
The objective of the report is to analyze the adherence of Flight Centre Travel company
in alignment with the conceptual framework of AASB. It is gathered from the paper that the
organization totally confirms with the regulations of financial reporting conceptual framework of
IFRS. Moreover, in case of Flight center travel company, the balance sheet statement is
developed in a way which supports investors to attain important information related with its
economic resources aligned with AASB regulations. The annual report of the company indicates

12CONTEMPORARY ACCOUNTING ISSUES
that it offers timely information regarding financial statements to its investors to make effective
investment decisions.

13CONTEMPORARY ACCOUNTING ISSUES
References
Biondi, L. and Lapsley, I., 2014. Accounting, transparency and governance: the heritage assets
problem. Qualitative Research in Accounting & Management, 11(2), pp.146-164.
Brown, P., Preiato, J. and Tarca, A., 2014. Measuring country differences in enforcement of
accounting standards: An audit and enforcement proxy. Journal of Business Finance &
Accounting, 41(1-2), pp.1-52.
Christensen, H.B., Lee, E., Walker, M. and Zeng, C., 2015. Incentives or standards: What
determines accounting quality changes around IFRS adoption?. European Accounting
Review, 24(1), pp.31-61.
Crawford, L., Helliar, C., Monk, E. and Veneziani, M., 2014, March. International Accounting
Education Standards Board: Organisational legitimacy within the field of professional
accountancy education. In Accounting Forum (Vol. 38, No. 1, pp. 67-89). Elsevier.
De Villiers, C., Rinaldi, L. and Unerman, J., 2014. Integrated Reporting: Insights, gaps and an
agenda for future research. Accounting, Auditing & Accountability Journal, 27(7), pp.1042-1067.
Fctgl.com., 2018. [online] Available at:
http://www.fctgl.com/wp-content/uploads/2017/09/Flight-Centre-Travel-Group-Annual-Report-
2017.pdf [Accessed 14 Apr. 2018].
Firth, M. and Gounopoulos, D., 2017. IFRS adoption and management earnings forecasts of
Australian IPOs.

14CONTEMPORARY ACCOUNTING ISSUES
Lovell, H., 2014. Climate change, markets and standards: the case of financial
accounting. Economy and Society, 43(2), pp.260-284.
Mayne, J., 2017. Accountability for program performance: a key to effective performance
monitoring and reporting. In Monitoring performance in the public sector (pp. 157-176).
Routledge.
Palea, V., 2014. Fair value accounting and its usefulness to financial statement users. Journal of
Financial Reporting and Accounting, 12(2), pp.102-116.
Soh, D.S. and Martinov-Bennie, N., 2015. Internal auditors’ perceptions of their role in
environmental, social and governance assurance and consulting. Managerial Auditing
Journal, 30(1), pp.80-111.
Vafaei, A., Ahmed, K. and Mather, P., 2015. Board diversity and financial performance in the
top 500 Australian firms. Australian Accounting Review, 25(4), pp.413-427.